Wake Up, Dhaka! China’s ‘Help’ Comes at a Steep Price…

China’s investment and lending in South Asian and African countries has dramatically increased following the “Going Global” strategy of 1999, reaching new heights with the ambitious Belt and Road Initiative (BRI) launched in 2013. This strategic expansion positioned china as a key trading ally for many middle and low-income countries, especially in South Asia. Chinese government’s interest in bangladesh gained prominence around 2009 and intensified after Xi Jinping’s landmark visit to Dhaka in 2016—the year bangladesh joined the BRI and cemented its status as Beijing’s strategic partner.

Post-2016, Chinese investments in bangladesh have boomed, particularly in large infrastructure projects. Additionally, since 2015, beijing has been Dhaka’s largest trading partner in both economic and defence sectors. Given these developments, analysing the impact of China’s growing investments and loans on bangladesh, a steadfast ally in Beijing’s network, is crucial.

Since bangladesh joined the Belt and Road Initiative in 2016, Chinese investments in the country have skyrocketed, surging sevenfold to $1.346 billion in 2022 from $241 million in 2016. Bilateral trade also soared, reaching $25 billion in 2022 from $15.3 billion in 2016, with beijing injecting $800 million in investments last year alone. To further enhance economic ties, china granted duty-free access to 97 per cent of Bangladeshi products in 2021, later increasing this to 98 per cent. In terms of Foreign Direct Investment (FDI), china has become the frontrunner, contributing over $2.6 billion to bangladesh over the past decade and emerging as a top investor in the country’s exclusive economic zones. Unquestionably, Chinese investments have significantly boosted Dhaka’s economy. Nevertheless, the Dragon’s embrace may carry more curses than blessings.

Chinese lending in bangladesh demands special scrutiny. According to the Economic Relations Division (ERD), Chinese loans to bangladesh have reached $3 billion over the last four fiscal years, constituting about 40 per cent of the nation’s total external lending. In each of the last two fiscal years, Dhaka received at least $1 billion in Chinese loans, positioning china as the second largest bilateral lender and the fourth overall, accounting for 10 per cent of Dhaka’s total annual borrowings.